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Crunch Time for SAP
Or, will the real SAP
please stand up
(December 2000)
We don't want to be sensationalist or
alarmist, but it is beginning to seem to us to that SAP has reached
a critical decision point in their remarkable journey. After 26
years of amazing growth, including five staggering years in the USA,
SAP was undisputed king of the hill in 1997/8 ... but then something
strange happened. SAP kept pushing hard to develop additional
Industry-specific and country-specific versions of it's R/3 product,
and ensured that Y2K and the Euro issues would be kept at bay for
their customers. These are fine objectives, and SAP attained them
with regular efficiency ... but the market was changing.
At first it seemed that SAP had
neglected the broader CRM and Supply Chain areas, and they scrambled
to deliver APO and other new modules. But that's when the double
whammy struck. Just as they were focusing on the so-called New
Dimension products, so they were blown away by the arrival of the
web in general, and eBusiness specifically.
It's almost as if SAP - an
Engineering company at heart - was so busy perfecting their existing
R/3 product that they missed the broader strategic change. If this
was the case, then they weren't the first company to seemingly miss
this wave (some might put Microsoft in that camp as well), however
let's look at what has happened since then.
During 1999/2000 SAP have been in
turmoil. They have gone through multiple leadership changes in the
US and lost tremendous talent to Siebel, Ariba and other new
players. They are on their second share options plan, and, although
we do not have specific knowledge of this, we can only imagine the
see-saw of influence between Germany and the USA.
At the same time, US companies
(primarily) grew tired of waiting for the web enabled modules
promised under the mySAP.com banner during SAPPHIRE'99 in
Philadelphia. Ariba, Commerce One, I2, Siebel and other vendors had
(much) better marketing and (sometimes) better products already in
place, and they capitalized mercilessly on SAP's problems. The
result? Lost revenues for SAP, storming market caps for the newer vendors,
and
don't even talk about SAP's share price performance over the past
two years ...
All this seemingly resulted in Hasso
- who according to the Business Week article looked "grim and
jetlagged" - showing his frustration at an SAP users conference
in Berlin in May by admitting : "I don't know what we're doing wrong".
An incredibly enlightening statement. Well, Hasso, take a seat and
let us humbly give you our view:
We believe that SAP has the world's best ERP
product, and that they either do or could have products equal to or
better than the Ariba's and I2's of this world. There is no doubt in
our minds that a fully integrated enterprise solution (both ERP and
eBusiness type applications) is far
preferable to a collection of best-in-class systems. But we are
fearful that unless SAP moves very quickly, they will lose their way
and a tremendous opportunity will have been lost.
So, here then is our humble opinion on what SAP should do:
- Improve your marketing message. What's
with the name mySAP.com? Change it urgently. What's with the
adverts (in the US anyway) showing an individual booking a
flight via mySAP.com? Your power base is your 12,000 companies
who have spent millions implementing your product. Tailor your
marketing to their needs.
- Continue your redeployment of developers onto
web related products. Old fashioned analysis of your client
base must surely point out that Purchasing, CRM and Supply Chain
(e.g. contract manufacturing) are the low hanging fruit of the
moment. The alliance with Commerce One will help here ... but
that's only a 3% stake you have ...
- Resolve your Germany-USA cultural see-saw. Hint: the
USA is your biggest market. Do whatever it takes to retain your
top marketing and customer orientated people.
Whatever the SAP board decides to do, we hope they get it
right. Thousands of companies, with millions of users, have put
their trust in them over the past 28 years and they should not be
let down.
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